Mumbai: India’s Infrastructure Development Finance Co will raise at least Rs 100 crore from a foreign institutional investor via five-year bonds at 9.15%, a senior company official said, marking the first deal after easing of the overseas borrowing norms.
In August 2011, India’s stock market regulator allowed non-bank finance companies categorised as infrastructure finance firms to issue long-term bonds to foreign institutional investors.
“We have issued bonds to a FII under the infrastructure limit to a first time investor in India. FIIs will be able to trade this bond among themselves for the first three years,” senior director SJ Balesh said.
The pay-in for the deal is Thursday, he said.
Foreign investors have recently trimmed their holdings in Indian debt and equities on global uncertainities.
“Once the market stabilizes, this is a market which will take off and we will see that big insurance and provident funds which are globally looking at yields will start looking at Indian market,” Balesh said.
Allowing foreign investors to buy such bonds is intended to increase funding available for big-ticket projects such as roads and power plants in India, where inadequate infrastructure drives inflation and acts as a brake on growth.
India requires infrastructure investment of $1 trillion over the five years beginning April 2012, the government estimates.
This year through August, however, just $109 million of foreign funds had trickled into corporate infrastructure bonds, out of total issuance of $8.6 billion, according to bankers.
The total cap for foreign investors to buy corporate bonds under the long-term infrastructure category was raised by $20 billion to $25 billion in February.